Basel III
Ingves: internal modelling may create too much complexity
Basel Committee chair says complexity created by internal modelling has a range of adverse effects, though more research is needed
Should banks hold cocos or other kinds of buffers?
Richard Heckinger examines the merits of contingent convertible bonds vs other instruments for meeting regulatory requirements
Deal on output floors and op risk approach likely – Ingves
Revised standardised approach to credit risk will be “capital neutral” and more compatible with IRB
Bundesbank board member takes hard line on Basel negotiations
German central bank “not prepared to reach an agreement at any price”; calls for no universal output floors and abandonment of advanced approach for op risk
FSB’s agenda remains full going into 2017
Progress over past year includes loss absorbency, climate disclosure and shadow banking, though plenty of tasks remain for next year
Market forces drive deleveraging as well as regulation – Caruana
BIS chief says markets are forcing discipline on banks, although he concedes regulation is playing a role as well; discussion participants point to tensions in regulatory framework
Fischer: liquidity is mostly adequate but there are problem areas
Fed vice-chair recommends vigilance amid changing market structure, though he says problems are not widespread; SEC chief says she is “deeply concerned” on bond market liquidity
‘Strong’ correlation between leverage and financial connectivity – paper
Irish paper shows interconnected banks experience 'sharper contractions' in lending when faced with a shock; findings could have consequences for Basel III
Asia resolution rules risk conflict with G-Sib home regulators
Branches fear local regulators could ask banks for confidential home market information
Basel Committee outlines plans for ‘fundamental change’ of IFRS 9
Task force to consider impact of expected credit loss approach on regulatory capital, while consultation lays out interim plans
Coen seeks to quell European fears on Basel III
European parliament members accuse Basel Committee of favouring US over European banks; William Coen says “Basel process” is transparent and not dominated by any one interest
Independence, liquidity and a level playing field – yet another impossible trinity?
Jesper Berg warns it will likely be impossible to balance the demands of monetary policy independence, liquidity standards and achieving fairness for all banks
BIS research tests leverage ratio with adjusted DSGE model
Authors design a model with both leverage ratio and variable risk-weighted capital requirements, finding a range of benefits to constraining leverage
Fed’s Tarullo: stress testing needs to evolve
Fed is planning to toughen its stress-testing framework with better alignment with regulation and incorporation of dynamic “amplification” effects – though more research is needed
RBNZ floats idea of bank regulatory dashboard
Bringing regulatory disclosures together in one place could impose market discipline and allow more straightforward comparison of risks, central bank says
Largest banks meet Basel III capital standards – BIS and EBA
Banks have improved capital and liquidity ratios, reports note, but methodology may differ from that used by industry
Basel Committee hits turbulence on approach to year-end deadline
Central banks and supervisors offer support to its year-end goal, but industry players and EU countries show growing concern over higher capital levels
FSB sees limited evidence of regulatory side-effects
Global financial reforms appear not to have had a significant impact on market liquidity or emerging markets, and have helped prevent the global system from fragmenting, authority says
Basel Committee warns on potential missed deadlines
A “significant number” of Basel standards still need to be translated into domestic regulation as deadlines loom; problems with risk-weighted asset variability and inconsistency continue
Mervyn King on Brexit, crisis supervision, economic rebalancing and reforming the IMF
The former Bank of England governor discusses Brexit, radical regulatory reform, the difficulties rebalancing the European and global economies and an overhaul of the International Monetary Fund
Bank of Thailand's Veerathai on the Thai economy, governance and payment reform
Bank of Thailand's governor speaks to Christopher Jeffery about the resilience of the Thai economy, governance and payments infrastructure reforms, plus why he does not agree with the IMF
Proposal for calculating capital requirements for concentration risk
Working paper warns “inadequate reflection” on concentration risk can lead to banks holding too little capital; proposes technique for calculating appropriate levels
Italian paper looks at effects of Basel leverage ratio on repo and refinancing
A move to higher leverage ratios by eurozone banks has not decreased their repo and refinancing activities, a Bank of Italy paper says
Credit, liquidity and collateral versus more intermediation
Richard Heckinger examines the costs and benefits of complex financial market infrastructure regulations, including the impact of new layers of intermediation